Sponsored briefing: The rights of policyholders in collective life insurance contracts ¹

Queiroz Cavalcanti Advocacia on the duty to inform about restrictive and limiting clauses on the rights of policyholders in collective life insurance contracts

On 2nd March 2023, the Brazilian Superior Court of Justice (‘Superior Tribunal de Justiça’ – STJ), Brazil’s highest legal body regarding the interpretation of Federal Laws, deliberated on a mandatory precedent and determined that, in collective life insurance contracts, the stipulator has the exclusive responsibility to inform the policyholder of their rights regarding restrictive and limiting clauses, in order for them to understand the extension of the warranties before the execution of the contract.

The subject had not previously been the object of qualified voting, but there were precedents from the STJ’s Private Law Panels that recognised the duty of the insurance company to inform the policyholder, as this duty could not be transferred to third parties². However, in recent decisions, the court overruled this interpretation and determined that it is the stipulator’s sole responsibility to inform the policyholder before the execution of the contract³.

This divergence of precedents created a state of legal uncertainty magnified by opposing interpretations by the state courts. In order to resolve the divergence and unify the national interpretation of the Brazilian Civil Code, the second section of the STJ selected case number 1.874.811/SC (resp. 2020/0115101-6) and case number 1.874.788/SC (resp. 2020/0115074-0) to be judged through the Repetitive Appeals procedure. The decision issued by the court in such cases shall extract a thesis that shall be necessarily observed by all the national courts of Brazil, applying the STJ’s interpretation to ongoing cases and the new ones that may be filed.

In the trial, the Justices underlined that, due to the asymmetrical relation between policyholder and insurer, the duty to inform must be fulfilled differently according to the type of contract, whether individual or collective.

In individual insurance contracts, entered into between the insurance company and the policyholder, it falls on the insurance company and its intermediaries (insurance brokers) the duty to inform the policyholder regarding any delimitation of the insurance warranties before the execution of the contract and in an adequate manner. If the insurance company fails to comply, the limiting or excluding clauses may become ineffective.

However, in collective life insurance contracts, the formation of the contract is different, considering that the negotiation of the clauses and the interests involved in these agreements are solely between the insurance company and the stipulator, for the benefit of a specific group, that is only defined after the execution of the contract⁴.

The insurance company must, however, inform the stipulator, in an appropriate manner and also prior to contracting, all the delimitations of the contract, so that the stipulator may agree and provide information to interested parties who may come to adhere to the contract.

The stipulator acts as the representative of the policyholders and is responsible for the inclusion and exclusion of beneficiaries of the insurance policies, as well as ensuring the performance of the compliance of the obligations stipulated in the contract, as stated in article 801 of the Brazilian Civil Code⁵. In this sense, it is the stipulator’s exclusive responsibility the duty to inform the policyholders before the contract, due to the principle of good faith in insurance contracts.

Therefore, by a majority ruling, the second section of the STJ established the thesis for theme number 1112 recognising that, in collective life insurance contracts, it is the stipulator’s sole responsibility, as the legal representative and only subject who has previous bonds with the members of the group (proper stipulation), to inform the potential policyholders before the execution of the contract.

Nevertheless, the cases that originated from improper stipulations and false stipulators are not included in the processes judged through this procedure, in view that the insurance policies in these cases shall be analysed individually. The appellate decision will be redacted and published, but the thesis shall be enforced by all the courts in the country henceforward when judging similar cases.

With this decision, it is expected that the stipulators will act more efficiently when informing the policyholders, in order to obtain an insurance contract with limits known by the parties.

The decision represents a step forward, not only because it settles a controversial subject and with frequent conflicts, but also because it recognises the usual execution of the collective life insurance contracts, which are very popular, facilitating their promotion as well as the development of the sector.

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1. By Carlos Harten and Leonardo Concentino, partners at Queiroz Cavalcanti Advocacia.
2. AgInt no REsp n. 1.835.185/SC, relator Ministro Marco Buzzi, Quarta Turma, julgado em 26/11/2019, DJe de 27/AgInt on REsp n. 1.835.185/SC, rapporteur Minister Marco Buzzi, Fourth Panel, judged on 11/26/2019, DJe of 11/27/2019; AgInt on REsp n. 1.848.053/SC, rapporteur Minister Raul Araújo, Fourth Panel, judged on 10/3/2020, DJe of 2/4/2020; AgInt on REsp n. 1.845.263/SC, rapporteur Minister Marco Aurélio Bellizze, Third Panel, judged on 3/30/2020, DJe of 4/6/2020; AgInt in AREsp n. 1.559.165/PR, rapporteur Minister Antonio Carlos Ferreira, Fourth Panel, judged on 4/5/2020, DJe of 7/5/2020; between others. Answer no. 1.825.716/SC, rapporteur Minister Marco Aurélio Bellizze, Third Panel, judged on 10/27/2020, DJe of 11/12/2020; AgInt in AREsp n. 1,737,671/SC, rapporteur
3. Minister Marco Aurélio Bellizze, Third Panel, judged on 3/15/2021, DJe of 3/17/2021; AgInt on REsp n. 1,850,764/SC, rapporteur Minister Marco Aurélio Bellizze, Third Panel, judged on 4/19/2021, DJe of 4/23/2021; EDcl on AgInt on REsp n. 1.893.383/SC, rapporteur Minister Moura Ribeiro, Third Panel, judged on 4/26/2021, DJe of 4/28/2021; AgInt in AREsp n. 1,724,600/SC, rapporteur Minister Marco Aurélio Bellizze, Third Panel, judged on 11/5/2021, DJe of 5/24/2021; AgInt in EDcl in AREsp n. 1,709,389/MS, rapporteur Minister Marco Aurélio Bellizze, Third Panel, judged on 11/5/2021, DJe of 5/14/2021; AgInt no AgInt no REsp n. 1.849.456/SC, rapporteur Minister Antonio Carlos Ferreira, Fourth Panel, judged on 11/28/2022, DJe of 12/5/2022; between others.11/2019; AgInt no REsp n. 1.848.053/SC, relator Ministro Raul Araújo, Quarta Turma, julgado em 10/3/2020, DJe de 2/4/2020; AgInt no REsp n. 1.845.263/SC, relator Ministro Marco Aurélio Bellizze, Terceira Turma, julgado em 30/3/2020, DJe de 6/4/2020; AgInt no AREsp n. 1.559.165/PR, relator Ministro Antonio Carlos Ferreira, Quarta Turma, julgado em 4/5/2020, DJe de 7/5/2020; dentre outros.
4. TZIRULNIK, Ernesto; CAVALCANTI, Flávio de Queiroz Bezerra; PIMENTEL, Ayrton. The insurance contract in accordance with Brazilian Civil. São Paulo: Roncararati, 2016. p307.
5. Article nº 801. Personal insurance coverage can be stipulated by a natural person or a legal entity for benefit of a group that is in any way linked to the natural person or legal entity. § 1º The stipulator does not represent the insurance company to the insured group, and it is the only one responsible, regarding the insurance company, for compliance to the contractual obligations. § 2º Changes in the prevailing insurance policy will depend on the express consent of the policyholders that represent three quarters of the group.

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